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Brazil Prices Fall But Public View on Economy Sours

Brazil Prices Fall But Public View on Economy Sours

Brazilian consumer prices fell last month for the first time in more than a decade, a potential boost for President Michel Temer as he faces bribery charges.
The inflation rate turned negative, with consumer prices contracting by 0.23% in June compared to May, the state statistics institute IBGE said. That was the first overall price drop since 2006, and followed a steady monthly decline in inflation this year, AFP reported.
The trend has raised hopes that Latin America’s biggest economy is emerging from the worst recession in its history. The central bank has been cutting interest rates for several months to spur economic activity. Analysts said Friday’s data may prompt it to speed up rate cuts.
June’s fall was driven by lower food, housing and transport prices, the institute said. Brazilian inflation had hit 10.67% at the end of 2015 and 6.29% last year.
Analyst Alex Agostini of consultancy Austin Rating said Friday’s data gave a mixed signal about the country’s economic health. He judged it good news for the prospect of lower interest rates but cautioned it was also “bad news in that it reinforces the sense of lethargy in the economy.”
Temer, a conservative, has launched austerity reforms that he says will strengthen public finances and the economy. But he now risks being put on trial on bribery charges.
Meanwhile, another reported says, Brazil’s economic conditions have worsened, and the public’s views about the economy have soured. Estimates from the country’s national statistical institute indicate that over 14 million Brazilians are out of work, pewresearch.org reported.
Over the past three years, the nation’s jobless rate rose by more than 6 percentage points, reaching 13.7% of the labor force in the first quarter of 2017. Young adults are especially affected by the economic crisis: Nearly three-in-ten Brazilians (28.8%) between the ages of 18 and 24 are jobless, an increase of nearly 16 percentage points since the end of 2013. During this period, the country’s gross domestic product shrank by more than 7% and the industrial sector shrank by more than 12%.
The national public feels the bleak state of the economy. About eight-in-ten Brazilians (82%) say their country’s economy is bad. That figure is double the share of the public who said this in 2013, one of the highest levels of economic dissatisfaction recorded in the global Pew Research Center survey.
The Brazilian public expects a recovery soon. While recent economic forecasts point to a slow recovery, the majority of the Brazilian public remains confident that the economy will bounce back in the near future.
Nearly seven-in-ten Brazilians (69%) say the country’s economic situation will improve over the next 12 months, with roughly a third (34%) believing it will improve a lot. Individuals with higher levels of education are less optimistic about the future, however. Over a half (51%) of Brazilians who completed college believe the economy will improve, compared to 71% of those without university degrees.